The International Monetary Fund (IMF) has called for the immediate implementation of cost-cutting measures to ensure economic growth and debt sustainability.
At a meeting with parliament's Public Accounts Committee and Economic Committee, the IMF said the entire economy has benefited from the growth of the tourism industry. They noted that the economy would benefit more if the new terminal of Velana International Airport (VIA) was opened this year.
The IMF estimates that the Maldives' economy will grow by five percent this year. The IMF noted that this is a good estimate compared to other countries.
However, the IMF told MPs that there are many challenges to this economic growth. Piyaporn Sodsriwiboon, who led the IMF delegation, said there was no time to improve the situation.
The IMF is urging the government to accelerate the implementation of its fiscal reform agenda.
Sodsriwiboon said the existing universal subsidy system should be changed to a targeted subsidy system. She also urged for reforms in State Owned Enterprises (SOE) and Aasandha health insurance scheme.
The IMF delegation further highlighted the financial challenges posed by infrastructure development projects. They said there were difficulties in obtaining the necessary funds to implement these projects and urged to reprioritize the Public Service Infrastructure Projects (PSIP).
On fiscal policies, the IMF said stopping money printing and the central bank's active monetary policy were good changes. But they said there was a big systematic risk in the financial sector due to increased investment in state securities.
The IMF delegation also noted that Maldives debt as a percentage of GDP needs to be addressed and more work needs to be done to ensure the sustainability of the debt.
To facilitate this, the IMF encourages policies to be shaped in this direction, noting the improvements made to financial laws over the past year. The IMF told the committee that these changes are essential to facilitate economic growth in the long run.
The IMF delegation is currently in Maldives as part of its annual Article IV mission to assess the country's economic health and provide policy recommendations. The IMF conducts these missions through annual bilateral discussions with member countries.
